Yves here. Australia and Maryland have both sought to tax Google’s and Facebook’s online advertising putting their broader role the spotlight. Both platforms make considerable use of traditional media content while pulling digital ad revenues away from them. Old school publishers had already suffered due to loss of classified ad income to Craigslist and in parallel, the dwindling of print subscriptions. One reason for getting a hard copy paper had been to get stock prices; when they became available on line, initially with a 20 minute delay, many readers deemed a hard copy paper to be frivolous. I confess to being a bit of fogey; I always buy a paper in the airports and find I scan a much broader range of stories, more efficiently, than I do online. Nevertheless, I spend so much time on the Web that getting a print paper on a regular basis seems like overkill.
Given this history, it’s not hard to see that having Google and Facebook eat the diminished revenues available to publishers is destructive to their businesses. Their domination raises questions of whether they are unfairly exploiting original publisher content. The problem is that no single publisher has the financial heft to carry out a legal fight without running considerable risk; even a group of publishers wouldn’t have the same firepower. And traditional notions of copyright don’t help them much either. So this is a legitimate area for government action. Yet as Steven Hill pointed out in his cover note:
There is a larger issue at stake here that recent media coverage has missed: are Facebook, Google, Twitter and other digital media platforms really the new public square? Or are they new techno publishers swiping content from other publishers without paying for it?
Many newspapers and news organizations have been devastated by this impact, including in Europe. Yet the European Commission and the Biden administration have been notably silent.
Some readers may be put off by the invocation of the “free press,” since today’s media outlets seem much less halo-worthy than in the Walter Cronkite era. However, the press performs the critical and costly function of fact gathering. That was getting hard even before newspaper revenues started shrinking.
In the early 2000s, I had lunch with a New York Times reporter who had joined the paper after he’d opened the Wall Street Journal’s office in China in 1993 and returned in 1999. He said there had been a sea change in reporting in the US in the six years he’d been away. Corporations had gotten much better in spinning the press and throwing sand in the gears of reporting. This had occurred as the Internet had greatly increased the pressure to publish quickly. The result, he said, was that it was now impossible to get to the bottom of a story in a normal news cycle.
And with an income-starved media, there’s seldom enough resources to keep digging after news has broken.
By Steven Hill, the former policy director at the Center for Humane Technology and author of seven books, including Raw Deal: How the Uber Economy and Runaway Capitalism Are Screwing American Workers and The Startup Illusion: How the Internet Economy Threatens Our Welfare
From France to Australia to the US state of Maryland, the free press is waging a battle for survival against Facebook and Google. Besides being gushing firehoses of COVID and election disinformation and QAnon conspiracies, another of Google and Facebook’s dangerous impacts is undermining the financial stability of media outlets all over the world.
Where is the Biden administration and European Commission in this fight? A lot is at stake, yet so far they have been quiet as church mice.
How do Google and Facebook threaten the Free Press? These two companies alone suck up an astounding 60% of all online advertising in the world (outside China). With Amazon taking another 9 percent, that leaves a mere 30% of global digital ad revenue to be split among thousands of media outlets, many of them local publications. With digital online advertising now comprising over half of all ad spendng (and projected to grow further), that has greatly contributed to underfunded and failing news industries in country after country, including in Europe and the US.
Australia’s situation is typical. Its competition commission found that, for every $100 spent by online advertisers in Australia, $47 goes to Google and $24 to Facebook (71%), even as traditional advertising has declined. Various studies have found that the majority of people who access their news online don’t go to the original news source, instead they access it via Facebook’s and Google’s platforms which are cleverly designed to hold users’ attention. Many users rarely click through the links, instead they absorb the gist of the news from the platforms’ headlines and preview blurbs.
Consequently, Facebook and Google receive the lion’s share of revenue from digital ads, rather than the original news sources receiving it. Note that Facebook and Google could tweak their design and algorithms to purposefully drive users to the original news sources’ websites. But they don’t.
So Australia decided to fight this duopoly with some rules-setting of its own. A new law will require large digital media companies to compensate Australian media companies fairly for re-packaging and monetizing their proprietary news content. Media outlets around the world are watching to see how this plays out.
Google initially fought the proposal, but finally negotiated deals with Australian news publishers to pay them some compensation. But Facebook flexed its digital muscles by cutting off Australia entirely from its platform for several days, preventing Aussie news publishers as well as everyday users, including important government agencies like health, fire and crisis services, from posting, viewing or sharing news content.
The result was jarring, the proverbial “shot heard ‘round the world.” Facebook censored Australian users more effectively than the Chinese communist government ever could, prompting charges of “big tech authoritarianism.” Facebook finally relented to Australia’s requirement, in return for some vague and uncertain concessions. But the message of raw, naked platform power was unmistakably clear.
Now a similar battle is playing out in the US state of Maryland. Over the last 10 years, US newspapers’ advertising revenue has declined by 62%, and without that funding newsroom employment dropped by nearly half. Squeezed by these economics, Maryland approved the US’s first tax on digital ad revenue (earned inside its state borders), targeting companies like Facebook, Google, and Amazon. The measure is projected to generate as much as $250 million in its first year, dedicated to schools.
But this battle has only begun. Lawsuits against Maryland are being threatened by the tech giants, even as legislators from the states of Connecticut and Indiana have introduced similar measures.
The Bigger Picture: What’s at Stake
Nelson Mandela once said, “A critical, independent and investigative press is the lifeblood of any democracy…It must have the economic strength to stand up…[and] sufficient independence from vested interests to be bold and inquiring without fear.”
One of the most important, unsettled debates of the Internet age is whether digital media platforms like Facebook, Google/YouTube and Twitter are the new “public square,” a kind of global free speech Agora, or just the latest techno variety of old-fashioned publishers and broadcasters. Or a hybrid in between.
Over the past year that debate has intensified, crisis after crisis. Following the US Capitol ransacking, Facebook, Google, and Twitter all decided to discontinue “publishing” the president of the United States. Before that, as the platforms tried to deal with their toxic pipeline of disinformation regarding the Covid pandemic, racial tensions, and the presidential election, they slapped on warning labels and removed inflammatory content of certain users.
Now, in response to Australia’s law, Facebook pulled the plug on an entire country! That’s something only a giant monopoly publisher can do. In 2014, when Spain enacted legislation requiring Google to pay Spanish news outlets for the article snippets in its search results, Google bullied the government and closed its new service there.
Even before the past year’s seminal events, Facebook, Google and Twitter acted as publishers by turning over crucial decisions to its “engagement” algorithms about which content is featured at the top of users’ news feeds, and what is promoted and amplified. Its sophisticated “long tail” publishing machine uses precise content-targeting to niche users, showing different content to different people, including political ads. These are not passive online chat boards. They are “robot publishers,” in which algorithms perform the essential duties of an editor. From a legal or accountability standpoint, it should matter little that there is a supercomputer behind the curtain instead of a human.
So it’s pretty difficult at this point to argue credibly that these platforms are not in some sense publishers. Big Tech platforms are increasingly using their considerable publisher power to decide what content, sources and values should disappear or be amplified. These companies have more in common with the New York Times, Bild and Rupert Murdoch than they do with an online wikiboard or free speech corner in London’s Hyde Park.
Indeed, Facebook’s and Google/YouTube’s algorithmically-curated machines, with 2.6 billion and 2.0 billion users respectively, are the largest publisher and broadcaster in human history. Yet existing law does not treat these companies like a publisher or broadcaster, especially when it comes to liability or accountability. The digital media platforms hide behind the fact that they have billions of users generating content, which resembles an AT&T-like “common carrier” or public square role. But that should not obscure the centrality of their publisher role.
From that perspective, Facebook, Google and Twitter are completely within their publisher’s rights to decide it does not want to publish Donald Trump anymore, just as the New York Times would be. Or just as Rupert Murdoch has an editorial right to feature Boris Johnson on the front page of The Sun or at the top of a Fox News broadcast. Facebook’s Oversight Board should take note.
Threat to the Open Internet?
Critics of the Maryland and Australian approach claim it threatens the principle of an open internet. They also insist that traditional media outlets actually benefit when Facebook-Google-Twitter send user traffic back to the news outlets. The latter claim is easily debunked, since ad revenue at traditional media outlets has plummeted in the digital media platform era, while it has zoomed for the platforms. One study found that digital media traffic supplied less than 0.2 percent of total revenue to the news companies examined (while producing 24 percent of their total visitor traffic). So whatever revenue the traditional media outlets have received, it’s a drop in the bucket compared to what they have lost.
And the “open internet” principle must be balanced by the “copyright principle,” which was established years before the Internet was even invented. Copyright law mandates that any individual person or organization cannot swipe someone else’s content and monetize it without paying for it. The open internet principle essentially demands that traditional news sources bear the financial burden of continuing to produce quality news without fair compensation – much as it demanded that Napster be allowed to distribute copyrighted music for free without compensating musical artists and record companies.
The open internet principle is contributing to media financial instability throughout the world, and taken to its logical conclusion will cannibalize what’s left of the news media. With no credible news sources to rely upon, the digital media platforms would be even more overrun by the barbarian disinformation for which the platforms have become notorious. They are eating their own seed.
Already the digital media platforms have turned thousands of publishers and broadcasters into little more than ghostwriters for their platform content. Facebook has transmogrified from its initial hip mission of being a convenient place to post your vacation and puppy pics, and re-find your long lost college roommate, into a “re-publisher” that re-packages and monetizes product from the original producer without paying for it. In other industries, that’s called theft.
Democracies must stop this Big Steal before these companies steal away with our democracies. France and Austria have passed similar laws, Canada says it will adopt the Australian approach, and possibly India too.
But the EU and US have been noticeably silent. Both are known for encouraging competition and a vibrant media, so you would think their regulators would jump into action to aid the free press. Unfortunately, the reaction from the Biden administration has been nonexistent, though understandably it has a lot on its plate in its first months.
The European Commission’s silence has been more disappointing. Its two-year old Copyright Directive has been barely implemented, and now it’s championing its recently unwrapped Digital Services Act and Digital Markets Act. But those anodyne proposals lack regulatory teeth and, like the GDPR, do not fundamentally challenge the digital platforms’ toxic business model.
It’s time for governments on both sides of the Atlantic to step up their games, and ensure that Big Tech media respect the sanctity of copyright and stop undermining the world’s media and news outlets.
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As one commentator put it, what these platforms do is akin to stealing another vendor’s newspapers, putting them on your own newspaper stand, running your own ads on them and then keeping all the ad revenue to yourself. In a PR move designed to put it on the right side of this issue/debate, Google recently announced a shift away from precision targeted ads based on users overall web activity (In other words, no more third-party cookies on the chrome browser).
The headline grabber here was that Google, after minting billions mining user data on the unregulated web, is now trying to put reputational daylight between itself and the supposed enfant terrible of privacy on the web, Facebook. With its new found “virtue”, Google is casting itself as a white knight coming to the rescue of users besieged by a gigantic suction pump hungry for ever increasing amounts of individuals data, a latter day patron saint of user privacy. Dig a little deeper though and the announcement is nothing more than virtue signalling as non-tracking only applies when users aren’t logged into their Google accounts (I.e. users will still be extensively tracked when using Google’s family of apps). It’s window dressing pure and simple, and It won’t surprise me if these platforms trade shadow punches for PR purposes without fundamentally doing anything to alter their business practices.
With the ad business its undisputed cash cow, me thinks the likely scenario is that google probably has new technology that makes cookies obsolete, something like advanced AI tracking.
I think Google and the other giants must love Facebook – its the ugly sister that makes everyone else look a little prettier.
I think you are right that the other giants will put space between themselves and FB, the more public and regulatory attention focuses on FB, the easier it will be for those companies to work out the next phase of tracking technology.
The other challenge is that enacting regulations with teeth to rein in these tech giants is a process that moves at glacial pace. Bills have to be introduced, debated, provisionally approved, moved from e.g. lower to upper houses of parliament where they’re debated further, put to a vote etc. Meanwhile, FB or google can approve algorithmic tweaks and roll them out globally after ONE meeting. While they’re “moving fast and breaking things” in the form independent media businesses, regulators are always playing catch up.
The other thing I see is that embracing privacy regulations on the web (or pretending to) protects, in a perverse kind of way, the financial dominance of the tech giants. They blitzed their way to their current size by operating in the wild west of a privacy free web, now the startups that come after have to operate in a “constrained”, rule based, privacy-first environment. A boon for us users to be sure, but also a potentially perverse moat that ensures the new generation of startups will never leverage this “privacy rules arbitrage” to scale to a significant size that threatens their dominance.
Indeed – tight regulation usually favours big incumbents. It might cut their profits, but it makes their position more secure by increasing the cost of entering a market.
As you say, any attempt to regulate or break up these giants will be monstrously complex and very expensive. I must admit I like Matt Stollers suggestion of not trying to over regulate or break them up – but simply make advertising online illegal and so force them to find alternative revenue methods such as subscriptions. He sees the source of evil as the algorithms that are needed to push advertising models. I’d be interested to hear what (if any) flaws there are in this model.
Thanks for pointing out Stoller’s idea of banning online advertising, with which I emphatically agree. What about barring any sort of online tracking as well?
You think that your Senate/House Ferengi will abide to do such? Dream on!
They will never EVER quit their piggish suckling via the tit of their Big Ratf#ck Tech benefactors! … and you think they’ll change their pleb-brusing yellow stripes ..
Subscription models will run headlong into the problem related to something you mention in your comment to my response to David’s question, I.e. a generational issue. I’m not sure about the demographics but a not insignificant portion of web users grew up on “free/mium” being the dominant digital business model ( remember the “information wants to be free” dictum that was so popular in the early days of the world wide web) so subscriptions might be a hard sell to this freebie munching cohort. No easy solutions on this one I guess
The problem I run into with the subscription model is one of value. Sites like the Wall Street Journal, the New York Times, the Washington Post and the Financial Times all have subscriptions in the hundreds of dollars/year. The Atlantic wants $50/year. It all adds up fast, and I’m not prepared to budget $1k/year on subscriptions unless I’m CERTAIN I will obtain enough useful information from each subscription.
It’s a pity that concepts like “MicroPay” foundered, as I’d be a lot more open to paying $0.25 to $1 to read a single interesting article.
And they really want you to be logged in to those accounts. I’ve noticed that on youtube recently, it is constantly asking me to login, even though I don’t need to in order to watch the videos I’m looking for. I do have an account (I think) – I vaguely remember creating a login years ago when google still operated under the ‘don’t be evil’ mantra which I think I used once to watch one video that needed age verification, back before they even had youtube ‘channels’. I have no idea what the username and password would even be. Not sure if the prompts I get are because google knows I have this account, or because they would prefer everyone have an actual account and send the prompts to everyone, but I guess it probably doesn’t make much difference.
My guess is they will make having an actual account mandatory at some point before allowing you to watch anything.
I wonder what our experts on this site think of the standard way of presenting this problem on tech enthusiast websites – Techdirt, for example, with its rather supercilious assumption that the Australians are somehow Luddites. I instinctively don’t find that sort of argument convincing, but I wonder what those better informed think.
My stab at answering your question is that the answer lies embedded in the question. You describe these websites as “tech enthusiast”, and my experience with most of them is that they run on copious amounts of enthusiasm for anything techy, they’re echo chambers, extensions of the PR divisions of the tech companies if you will. These are the websites that write the “enforcing antitrust laws on tech giants hurts us all” type articles for a living.
Access journalism also plays into it with editorial policies at these websites de facto pro-tech in their slant, otherwise their journalists don’t get access to the important people at google or FB for interviews and comments. So when a story like FB vs Australian government pops up, it’s a popularity contest amongst the various websites to make the best impression on FB by trash talking the Aussie position on the matter. They know where their bread is buttered.
Its not an area I’m expert in, but I think there may also be a generational issue too. There is a generation growing up who have never known anything but Google and FB and Amazon and see them as entirely normal. There are a few junior hackers in my broader family who are in many ways anti-tech establishment (one has a t-shirt that says ‘There is no cloud, there is only other peoples computers’), but they are entirely comfortable with tracking and advertising online, much more so than people a little older.
So Australia decided to fight this duopoly with some rules-setting of its own.
And Murdoch’s publications got the lion’s share of the money in OZ. One needs to include the consolidation of the News papers, mustily under Murdoch’s thumb, to really have am “Independent” press.
IMHO newspapers are equally dishonest, because their carriage of the news is paid for by advertising – Consequently Newspapers” are, in reality, “Advertising Billboards” with a little news thrown in.
If news is to be distributed, then a public fund and free web publishing space would begin tn to form proper “News” dissemination.
Much of what I discern in this Google and Facebook fight with Murdoch is a wrestling match between equally ugly billionaires.
It was at times difficult to work out which side was which here in Australia. The mainstream behemoths of Newscorp and Fairfax were clearly against Facebook’s moves, however reader funded organisations like the Guardian and a lot of independent publishers who actually do rely on click throughs for a large percentage of their traffic were also fighting the battle on behalf of the Australian government. This despite the fact that it is Murdoch who ultimately benefits.
IMHO, a lot, if not all of this could be solved with a more expansive and aggressive enforcement of anti-trust law. Apparently, none of our anti-trust regulators and litigators understand that a “free” product means that the user is being exploited.
It is wise to pay attention to the threat that Google and Facebook pose. But it is also wise to look at who is complaining.
Rupert Murdoch holds a grip on Australian media even greater than his influence elsewhere(he is by birth an Aussie but I have lost track of the colour of his latest passport). Australian Governments bend their policies to accommodate Murdoch’s interests to an even greater extent than other regimes.
This is not a David/Goliath battle but one where none of he parties demand our sympathy. Whatever happens to our access to “fair and balanced” news is collateral damage as these big beasts trample the landscape.
Rupey renounced his Australian citizenship in the 80s to become a naturalised American citizen, as this was a pre-condition of broadcast media ownership in the US.
Though he’s from Melbourne, News Corp’s empire began in earnest with The News, a former newspaper from my hometown of Adelaide which he inherited from his father. In fact, News Corp was incorporated in Adelaide and its AGMs held there until the early 00s when it incorporated in Delaware.
Yes, shouldn’t media aggregators such as Naked Capitalism also pay a fee to media entities for posting their sites?
NC sends you to the news site, google gives you an abstract in the search result so many get what they need from that page and don’t click on the news site, depriving them of revenue. Also Yves wants people to pay for news, and many links are paywalled. At least one prominent commentor was shown the door for persistently posting paywall workarounds, if I recall correctly. In the modern day, one clears cookies when trying to access say the FT, then googles the headline and you’re in! This illustrates the cat bird seat that the google occupies and maybe the answer is to disallow the abstracts and paywall workarounds.
Publishers not only thank us for linking to them, they ASK us to link to them.
This isn’t at all the same as FB where entire swathes of articles regularly get posted (intellectual property theft) or Google, which posts a pretty lengthy snippet.
And the fraction of my miniscule ad revs that they’d get would amount to couch lint. The accounting nuisance would more than offset the miscroscopic monetary value.
The laws are therefore limited to the big boyz.
Two comments:
First, my modest solution to the Google and Facebook “Steal the news from the newspapers” is the traditional method used by list managers; salt the list with names that are phony and available in only one place, the salted mailing list.
For newspapers the system might look like this; routinely publish articles with mistakes- names with errors, financial numbers with insignificantly “wrong” data, etc. Then as a matter of practice, explain to the readers/users what you are doing with a small front-page notice- and a list of corrections to the minor errors published exactly one month ago. In the mean time track Google and Facebook to establish the theft and hire one junior lawyer to auto generate hundreds of small claims actions. Pay the junior lawyer a small fee- and a nice percentage of the wins. Small claims court has the advantage that the Google “Ignore you” defense doesn’t work.
Second, I’ve heard that the revenue for TV addvertisements has taken a double digit dive in the past year. Under the “First they came for the newspapers and yoy said- “but I’m safe”-then they came for you…” theory there may be some interesting “salted news” possibilities there. Laughing at Facebook and Google for publishing false items drawn from local TV news may be the best first step
While sites like Google undoubtedly compete with newspapers for our attention and therefore advertising revenue, it’s not as though that’s a primary or perhaps even very important part of their business. On my part I’ve never paid much attention to Google News because I don’t think the selection process (still algorithmically driven?) is very good.
And for Facebook, a site devoted to social chatting, news links are likely even less of a business factor.
Meanwhile the news business itself has gone downhill as Yves descries above (from 2000–early Google and Facebook not yet even a thing).
It was cable television that led to more instant news and less thoughtful news. At this point the national papers like the Post and Times have developed what is practically a promotional relationship with CNN or the PBS News Hour so perhaps the newspapers are getting theirs back that way. But they also benefit from non news sites like Google or Facebook linking to them. Reportedly when Facebook temporarily cut off Australia one newspaper there lost 8 percent of their web traffic.
Bottom line–this is not a simple question IMHO.
Forcing these online media thieves to turn over some revenue to news sources is, I think, not much of a solution. It does nothing to make up for the major loss of revenue from classified ads or the loss of readers who no longer need stock tables. And the dollar amounts involved anyway aren’t likely to amount to much.
I’ve thought about this for years and I doubt there’s any market-based solution. The only solution I can see is major funding from the currency issuer that — adjusting for the current polarized media environment — ideally would go to four national PRINT (indispensable for accountability, as well as readability) newspapers, each with an openly stated political perspective along the well-established Western lines of far left, center left, center right and far right. Funding would be automatic, divorced from any federal interference and linked to inflation.
One of the big complaints is the loss of local news coverage rather than the supposed sufferings of the WaPo or the NYT.
But my local small town newspaper is owned by Gannett which is not exactly a storefront operation and the same for the next city over. In fact Gannett was one of the first to dumb down the news with USA Today–aka McPaper–back in the 70s.
I think there really are no heroes or villains here unless the villain is technology itself.
Yves, you seem to have left out the counter arguments in your post.
Ad business and news paper circulation were on the decline before the internet. The internet accelerated that decline.
Facebook wrote that they make less than 4% of their revenue on ads shown with news posts. In Australia the publishers post their stories on Facebook (i.e., they are not picked up and posted automatically by Facebook bot). Facebook turned off news sharing in Australia (best of all worlds) and the publishers complained.
In Germany the law changed requiring Google to get consent (and pay) for news content. Google offered an option to only show the website with no headline and abstract of news sites. Publishers chose to waive the fees and to continue to show headline and abstract. Even before that all website owners have the option to opt-out from being listed on Google.
Google News doesn’t show ads at all. I don’t have numbers, but I rarely see ads next to news related search results I get from Google.
Maybe there are some market forces in here that force the publishers to do that. Especially in the later case it wouldn’t be a problem if all German publishers agreed to turn off their abstracts at the same time leading to people to click through to their pages.
Frankly I think the news publishers benefit more from the aggregators than they are being hurt by them.
You just evidenced you have a reading comprehension problem, did not read the post in full or with care, or are arguing in bad faith. You completely ignored the points I made in my long opening (“classified ad income,” FFS and in the very first para!) and characterized the points made by Steven Hill as coming from me. All are grounds for having your comments privileges restricted or removed entirely. Keep it up, champ.